UK House Prices -The next bubble waiting to burst ??
Scripophilist - Mon, 19 Dec 05 :
Paul just a little further up you said prices rose last year. Certianly in nominal terms but striping out those properties that have been improved and hot spots most areas probably showed slight falls. With the cost of borrowing exceeding net rental income I think residential housing is a dreadful investment. In your 87-05 example your return was less than 7% if you thought that was good your 05 onwards return looks set to be much lower than that. This is why housing, despite, the past will be such a poor investment.
Rental income will probably continue to rise in line with earnings but it will take years for property to become good value to an astute investor again. I'm happy to wait.
In the stock market I can pick up companies on earnings yields of 10% growing about that much a year at least.
